Bangladesh Raises Fuel Prices Amid Middle East Conflict

On April 18, 2023, the government of Bangladesh announced a significant increase in retail fuel prices, raising them by 10% to 15%. This decision was attributed to a sharp rise in global crude oil prices and supply chain disruptions caused by the ongoing conflict in the Middle East, particularly the Iran war. Under the new pricing structure, petrol is now priced at 135 taka ($1.40) per litre, diesel at 115 taka, and kerosene at 130 taka. The energy ministry indicated that the increase was unavoidable due to escalating import costs, which have been exacerbated by rising freight and insurance expenses.

Bangladesh raises fuel prices as Iran war drives up costsThe Straits Times'Fuel prices may rise if war prolongs'

The fuel price hike is expected to intensify inflationary pressures in Bangladesh, particularly affecting sectors such as transportation and agriculture that heavily rely on diesel. This situation is further complicated by the country's reliance on imported fuel, which has strained its foreign exchange reserves. The government had previously attempted to mitigate the impact on consumers through subsidies and stock controls, but these measures have become increasingly unsustainable as global prices continue to rise.

The Straits TimesBangladesh raises fuel prices as Iran war drives up costs'Fuel prices may rise if war prolongs'

The Bangladesh Petroleum Corporation (BPC) reported that the ongoing conflict has led to supply strains, with delays in fuel shipments contributing to the crisis. A notable disruption includes the delayed arrival of a 100,000-tonne fuel shipment from Saudi Arabia, which has further strained the supply situation. In response, the government is increasing imports of refined fuel and building reserves to address potential shortages.

'Fuel prices may rise if war prolongs'

Dr. Zahed Ur Rahman, the Prime Minister's Adviser on Information and Broadcasting, stated that the government may need to consider further adjustments to fuel prices if the conflict in the Middle East persists. He emphasized that any decision would depend on the evolving global situation, acknowledging the uncertainty surrounding the conflict's duration and its potential impact on the energy market.

'Fuel prices may rise if war prolongs'

Zahed noted that while there would be no immediate fuel price hikes in April, the government is closely monitoring the situation. He urged caution against misinterpretation of his statements regarding future price adjustments.

'Fuel prices may rise if war prolongs'

The recent price increase has led to public discontent, with reports of long queues at petrol stations as consumers engage in panic-buying and hoarding. Officials have indicated that while supply to petrol pumps has not been reduced, stocks are depleting rapidly due to unusually high demand. This has raised concerns about the potential for further fuel shortages and increased living costs for the population.

'Fuel prices may rise if war prolongs'

While the government has taken steps to address the fuel supply crisis, there are conflicting reports regarding the extent of the shortages and the effectiveness of the measures implemented. The situation remains fluid, and further adjustments to fuel prices may be necessary depending on global market conditions and the ongoing conflict in the Middle East.

Bangladesh raises fuel prices as Iran war drives up costs

• “The situation in the Middle East could deteriorate or it could improve through negotiations.” — Dr. Zahed Ur Rahman, Prime Minister's Adviser on Information and Broadcasting

'Fuel prices may rise if war prolongs'

• “If this continues for long, it will be difficult to maintain subsidies indefinitely," Zahed said.” — Dr. Zahed Ur Rahman

'Fuel prices may rise if war prolongs'

• “We have already said if the situation continues, some adjustments in prices may be necessary. I am saying it may be necessary - not that it will definitely happen,” — Dr. Zahed Ur Rahman

'Fuel prices may rise if war prolongs'